Under existing law, the State of Nevada is prohibited from donating or loaning state money or credit, or subscribing to or being interested in the stock of any company, association or corporation, except a corporation that is formed for educational or charitable purposes. (Nev. Const. Art. 8, § 9) Existing law requires the State Treasurer to form an independent corporation for public benefit, the purpose of which is to act as a limited partner of limited partnerships or a shareholder or member of limited-liability companies that provide private equity funding to businesses that are located in this State or seeking to locate to this State and engage primarily in certain industries. (NRS 355.270) Under existing law, the State Treasurer is prohibited from making certain investments of money in the State Permanent School Fund unless the State Treasurer obtains a judicial determination that such an investment does not violate the prohibition in the Nevada Constitution against the State of Nevada donating or loaning state money or credit, or subscribing to or being interested in the stock of any company, association or corporation, except a corporation that is formed for educational or charitable purposes. (Nev. Const. Art. 8, § 9; NRS 355.060) Upon obtaining a judicial determination that an investment does not violate the Nevada Constitution, existing law authorizes the State Treasurer to transfer up to $75,000,000 from the State Permanent School Fund to the corporation for public benefit and requires the corporation by agreement to provide more than 50 percent of all private equity funding to businesses engaged in specified industries that are located or seeking to locate in Nevada. (NRS 355.280) Existing law authorizes the money transferred from the State Permanent School Fund to the corporation for public benefit to be used to make venture capital investments. (NRS 355.275) Sections 2 and 4 of this bill eliminate the restriction that the businesses in which the corporation for public benefit is authorized to invest engage primarily in certain industries. Section 1 of this bill instead requires that the business be engaged in an industry that is consistent with the State Plan for Economic Development, which the Executive Director of the Office of Economic Development within the Office of the Governor is required to develop under existing law. (NRS 231.053) Section 1 also: (1) clarifies the circumstances in which a business is located or seeking to locate in Nevada; and (2) requires that the businesses be seeking early-stage or middle-stage investments to commence or expand operations. Section 5 of this bill makes a conforming change relating to the revised criteria for eligible businesses. Section 2 also provides that, in addition to the money transferred from the State Permanent School Fund, any other money received by the corporation for public benefit is authorized to be used for venture capital investments. Existing law establishes the board of directors of the corporation for public benefit and requires the board to consist of the Chancellor of the Nevada System of Higher Education, the State Treasurer, five members from the private sector who have at least 10 years of experience in certain fields appointed by the Governor and legislative leadership and certain additional members who are required to be approved by a majority of certain board members. (NRS 355.270) Section 2: (1) replaces the Chancellor of the Nevada System of Higher Education on the board with the Executive Director of the Office of Economic Development; and (2) changes the experience required for the five appointed members from at least 10 years of experience in certain fields to demonstrated experience in those fields. Existing law authorizes the corporation for public benefit to place investments through the use or assistance of external asset managers and private equity investment firms. (NRS 355.275) Existing law also references the board contracting with venture capital investment firms. (NRS 355.270) Section 3 of this bill: (1) authorizes a corporation for public benefit to invest directly in eligible businesses; and (2) clarifies that the board is authorized to place investments though the use or assistance of venture capital investment firms. Section 3 also requires the corporation for public benefit to ensure that private equity money and venture capital investments made directly by the corporation or by external asset managers and private equity or venture capital investment firms are provided in a manner that: (1) ensures diversification among the recipient businesses; (2) gives priority to eligible businesses that meet specified criteria; (3) allows businesses to create new job opportunities; and (4) supports new, emerging and expanding businesses in this State. Existing law authorizes the State Treasurer to adopt regulations which include criteria for determining eligibility for and use of private equity funding, subject to certain limitations. (NRS 355.285) Section 5 of this bill expands that specific regulatory authority to also address such criteria for venture capital investments. Sections 6-9 of this bill revise obsolete references to the provisions governing the program administered by the corporation for public benefit to provide private equity funding and venture capital investments to specified businesses.

Statutes affected:
As Introduced: 355.270, 355.275, 355.280, 355.285, 75A.350, 225.081, 231.14055
BDR: 355.270, 355.275, 355.280, 355.285, 75A.350, 225.081, 231.14055